THE CURRENT GLOBAL BUSINESS MODEL IS NOT SUSTAINABLE
Modern employees want a career that matters, more so than ever before. Sadly, the majority of businesses and the global economy still operates and determine success based on profit growth and shareholder return, irrespective of other impacts. This is why behaviour such as offshore tax havens, pollution, corruption and incorrect motives are rife in many industries as the profit motive trumps all other motives. The result is social inequality, wealth inequality, pollution and even death from the actions of such businesses (see short video). A growing number of modern employees of the Millennial workforce have grown up witnessing these issues that are a result of a way of doing business that is no longer sustainable and want something more. Modern employees believe business can be a force for good, which is why there is now an increasing number of the Millennial workforce actively choosing to work for companies that are not purely profit driven and offer something much greater to tackle the world’s problems. Sadly, many organisations see doing good as being the antithesis of profitable growth, however a growing number of businesses big and small are proving the opposite is true. Detailed below are some of these alternative business models that are creating new ways of working.
Rising inequality threatens social cohesion and long-term economic growth
ALTERNATIVE BUSINESS MODELS AND WAYS OF WORKING
The Triple Bottom Line
The ‘Triple Bottom Line‘ (TBL or 3BL) model first defined in 1994, is an accounting framework that instead of just looking at the economic “bottom line’ or performance of a business, also looks at the Social and Environmental impacts of that business. It demands that a company’s responsibility lies with stakeholders rather than shareholders, where stakeholders are anyone who is influenced either directly or indirectly by the actions of the business. Since 2007 this became the dominant approach to full cost accounting in the public sector and an increasing number of businesses are adopting this framework to evaluate their broader business performance.
The Shared Value Initiative
The Shared Value Initiative is a management strategy that was defined in the 2011 Harvard Business Review article “Creating Shared Value”. Its core premise is that companies could bring business and society back together if they redefined their purpose as creating “shared value”- generating economic value in a way that also produces value for society by addressing its challenges. A shared value approach reconnects company success with social progress and can be done in three distinct ways: by reconceiving products and markets, redefining productivity in the value chain and building supportive industry clusters at the company’s locations.
B Lab is a nonprofit organisation that serves a global movement of people using business as a force for goodTM. Its vision is that one day all companies compete not only to be the best in the world, but the Best for the World® and as a result society will enjoy a more shared and durable prosperity. B Corps are for-profit companies certified by B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency. Today, there is a growing community of more than 1,600 Certified B Corps from 42 countries and over 120 industries working together toward 1 unifying goal: to redefine success in business.
There are now a growing number of investment companies that offer ‘ethical investing’, which looks at more than the financial return to any investments. This is not to be mistaken with philanthropy which is where wealthy individuals donate money to projects. Instead this is like any other financial investment where a monetary return is desired, except the lens with which these investments are made extend to create a better, fairer world. A good example of an ethical investment company with a great attitude is Alquity who believe that “for too long, investment has been about grabbing a quick profit, while giving nothing back. They want to change that for good by offering investment funds designed to achieve a Virtuous Circle that’s in everyone’s best interests.”
PROFIT WITH A PURPOSE: A NEW ERA OF CONSCIOUS CAPITALISM
Profit with a Purpose is a business model that builds on the Triple Bottom Line (TBL) model and shares a lot of the thinking in the other models mentioned above. One of the criticisms of the TBL model is that all three parts are not equal and that it is one objective (making money) with two key constraints. As such, Profit with a Purpose takes the three principles of the TBL (Economic, Social and Environmental) a stage further and instead of them being an accounting framework, they are a way of thinking that govern how business leaders make decisions. The 3 P’s of Profit with a Purpose are:
- Profit: Using capitalistic approaches of free market competition and innovation to drive profits
- People: Ensuring people (employees & suppliers) are treated well and not exploited when generating profit
- Planet: Ensuring that all means of making profit are not at the detriment of the environment
Following these three principles in equal measure will ensure that any business is making Profit With A Purpose. It will mean they exist not just to make money but to enrich the lives of not only their employees but the wider world. We have seen how greed through accumulating wealth at one end of the spectrum and not redistributing it, is causing huge human consequences across the globe that is not sustainable, which the Millennial workforce is all too aware of. Businesses have a lot of influence in the world and if they were to change their perspective from just maximising profits to instead using their wealth as a force for good, we will all be better for it. Profit With A Purpose does not demonise making profit but in fact encourages it, as the more profit that is made, the more money there is to invest in initiatives that will create more jobs, more innovations, better salaries and improve local areas. It is a form of ‘Conscious Capitalism’ that is a sustainable model for the future and one that Millennial workforces aspire to work within.
BUSINESSES WITH THE RIGHT KIND OF THINKING
Currently there are no major businesses that appear to follow all three principles of Profit With A Purpose. Some demonstrate one or perhaps two elements of this model but none demonstrate all three. To give you an idea of what can and is being done, the companies below are an example of those businesses that are adopting some of the Profit With A Purpose principles.
The John Lewis Partnership is a UK company that runs the upmarket John Lewis Department store chain and Waitrose supermarkets. They run a partnership model where every employee owns a stake in the company meaning they get a say in how it is run and a share of the profits
Cadburys is a global confectionary company famous for the Dairy Milk chocolate bar, but originated in the UK from the early 1800’s. Although the company now has different owners, it has a long history of treating its workforce well and had a purpose that was greater than just profit
Lego started back in 1949 and is probably the world’s most famous toy brand with approximately 62 LEGO bricks for every person on earth. LEGO is an abbreviation of the two Danish words “leg godt”, meaning “play well”, which has been the basis for the creation of a great corporate culture
Unilever owns some of the world’s best know household brands. In 2010 they committed to a company wide Sustainable Living Plan, which is their blueprint to double the size of the business, whilst reducing their environmental footprint and increasing their positive social impact